The amended Act on Reporting and Using Specified Financial Transaction Information and its subordinate regulations, which took effect on August 20, broadened the scope of reviews for virtual asset service provider filings.
The review now covers not only the service provider but also the financial condition and social creditworthiness of its major shareholders.
For users of exchanges, the more important criterion is not the scale of the service but whether the operator can actually maintain the revised requirements.
3-line summary
1. Reviews of virtual asset service providers now extend to major shareholders.
2. The debt-to-equity ratio must be 200% or lower.
3. Changes must not be implemented before acceptance.
Reviews That Focused Only on Representatives Now Extend to Major Shareholders
According to a report by the Law Times, the amended regulations expand the parties checked during virtual asset service provider filings from representatives and executives to major shareholders. The targets include the largest shareholder and principal shareholders; if the largest shareholder is a corporation, that corporation’s largest shareholder and representative may also fall within the scope of review. The review does not look only at nominal ownership stakes: if someone else actually controls major management matters, that person may also be subject to review.
Service providers themselves are now required to maintain a total-debt ratio of 200% or lower. Social credit requirements also apply, including the requirement not to have harmed credit order during the most recent 3 years. A filing may not be accepted if the provider lacks personnel for anti-money-laundering work, an independent audit system, or storage equipment and security facilities separated from the internet.
This standard is not simply an issue for new service providers. Edaily reported that, following amendments to the Enforcement Decree of the Specified Financial Information Act, virtual asset service providers and their major shareholders must lower their debt ratio to 200% or less as of the end of each quarter by next year. The same report estimated that more than half of the 29 virtual asset service providers as of the end of last year failed to meet this standard.
Changes to Ownership, Personnel, and Systems Must Also Be Reported in Advance
One particularly notable aspect of the revised regulations is that major changes to major shareholders and the legal compliance system are now subject to prior reporting. This may include a change in a major shareholder, a change in the compliance officer or reporting officer, a substantial revision to the anti-money-laundering system, or a change in the entity responsible for operating it.
Filing a report does not mean the change can be implemented immediately. The Law Times explained that implementing a matter subject to prior reporting before notification of acceptance may result in ex officio cancellation or punishment. Even when renewing a contract for a real-name-verified deposit and withdrawal account, a change report must be filed at least 30 days before the scheduled contract start date; beginning the contract before acceptance may constitute a violation of the obligation.
The review does not end with documents alone. Organizations and personnel are checked through organizational charts and résumés, facilities through contracts, equipment materials, and system-operation materials, and internal controls are reportedly examined for their actual feasibility of compliance. This is why, rather than looking only at news of a new exchange service or acquisition, it is also necessary to examine whether the capital and control systems supporting it are in place.
Virtual Asset Enforcement Procedures Will Also Be Established Starting October 1
According to the Law Times report, procedures for compulsory execution, enforcement of security rights, and provisional measures concerning virtual assets and claims for the transfer of virtual assets are scheduled to be newly established starting October 1. When a court issues an attachment order, the service provider must block transfers to the debtor and, upon application, must provide a written statement within 1 week specifying the type and quantity of the transfer claim and the virtual assets held.
If the court entrusts the sale, the service provider must sell the assets at the market price or another appropriate value and deliver to the enforcement officer the amount remaining after deducting taxes, public charges, and fees. This reflects the change as virtual asset service providers establish themselves as businesses responsible not only for brokering transactions but also for custody, internal controls, and responding to legal procedures.
References
Tags #VirtualAssets #VirtualAssetServiceProviders #ActOnReportingAndUsingSpecifiedFinancialTransactionInformation #SpecifiedFinancialInformationAct #VirtualAssetRegulation #VirtualAssetExchanges #MajorShareholderReview #DebtRatio #KoreaFinancialIntelligenceUnit #AntiMoneyLaundering #VirtualAssetCustody #VirtualAssetAttachment